In August, Toledano filed for bankruptcy on an 11-unit building at 97 2nd Avenue, which was foreclosed on earlier this year. Toledano lost control of the property when he defaulted on a $2 million loan from Brian Lefkowitz’s Lefko Funding, for which it served as collateral.
Shah countered with a motion to dismiss, claiming that Toledano had no rights to the property. Shah had bought the note on the property in April for $9.2 million, and had an agreement with the mezz lender to buy the property out of foreclosure. According to Shah, Lefkowitz had transferred the ownership in the owning entity to Shah, putting him in control of the property.
Toledano claimed that he retained managing rights to the property for a 75-day period until the sale closed. During that time, according to Shah, Toledano attempted to extort $2 million from him, and threatened to instruct the tenants to withhold rent.
“I will bury you, literally. I will bury this building and make sure of it,” Toledano told Shah, according to the documents filed by Shah.
In response to the motion to dismiss, Toledano filed a new complaint claiming that Shah bought the property knowing that Toledano was challenging the Lefkowitz foreclosure, and that the transfer to Shah should be voided.
In a hearing Monday, a federal judge ruled in favor of Delshah and dismissed the case. Shah told The Real Deal that he was pleased but not surprised by the outcome, since he knew Toledano had no authority on the property.
Lawyers for Toledano were not immediately available for comment.